"There isn't a great deal of scope for doing much more, but if America went ahead and did this we would have to take it up with the World Trade Organization," the European Commission trade spokesman, Peter Power, told the BBC's Chris Mason in Brussels.

European and Canadian ambassadors to Washington have already warned that the clause could provoke protectionism and trigger retaliatory moves.

EU Ambassador to Washington John Bruton said that, if passed, the measure could erode global leadership on free trade.

"We regard this legislation as setting a very dangerous precedent at a time when the world is facing a global economic crisis," he said.

'Under review'

The White House has said it is reviewing the Buy American part of the stimulus bill, although Vice-President Joe Biden said last week that it was legitimate to have some portion of it in the final measure.

Barack Obama says he hopes the bill will be passed quickly

In addition to the opposition from the EU and Canada, some senior US Republicans have cautioned that the Buy American measure could start trade wars.

Mr Obama has urged the US Congress not to delay his stimulus plan over modest differences.

The Democratic leader in the Senate, Harry Reid, has said he hopes the stimulus can be approved by the end of the week.

It is unlikely that the package will be able to pass the Senate without Republican support.

'Nationalistic trend'

The continuing wrangles over the Buy American clause come as hundreds of workers at UK power stations continue wildcat strike action in protest at the employment of Italian and Portuguese workers at a Total oil refinery.

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